The influence of the value of 4--on the yield of assets in the stock market

Section 3: Increase asset yield and increase efficiency of capital use

In the previous articles, we learned about the impact of sales and net profits on stock prices (valuations) and their size. In the beginning, we will explore the impact of asset yield, or, in layman's terms, the earning power of an enterprise.

Some people will say that the net profit (rate) is not already reflected the business is not making money, why still want to return the index of assets?

This is a good question.

In fact, net profit (rate) reflects the proportion of enterprises earning money from sales income, but it does not reflect the efficiency of enterprise's making money. For example, every 100 yuan income, two companies can get 10 yuan net profit, but a company to invest 20 yuan can, b companies do have to invest 100 yuan, then a, B Company's earning efficiency (ability) is significantly different.

Let's take an example of a company that appeared before. See figure below (data from Google's securities channel, as of 10 Q1 earnings, TTM refers to the past 12 months):

There is a very strange figure in the table, BlueNile te, PE can reach 56.35, higher than Amazon?

If you have any impressions of the first two articles, we have some conclusions.

1. Amazon is a very good company, not only sales growth (45% per year in the past three years), and the expansion of a number of highly imaginative new business, such as the Kindle Electronic publishing market, FBA, cloud computing, and so on, won 50 times times the high P/E, deserved.

2. Retailer is an annual increase in sales (11% per year for the past three years) and a relatively stable net profit (2). x percent float), although the company did a good job 09 has surpassed the new eggs, but accounted for a small and growth rate is not high, so retailer is a very stable enterprise, stable to PE only 11 times times almost and steel industry, than the Chinese 3C Retail industry representative (Suning, Gome) also low.

By contrast, BlueNile is a freak.

BlueNile's sales growth, instead of a modest increase, has been negative, with sales peaking in 07 and less than 07 since 08. Net interest rates are just as stable, even slightly lower than in 07, and no new business has been expanded. From these dimensions, it should be the same as retailer, PE is not high, the valuation is not high. But the fact is amazing, bluenile is not only higher than retailer, even more than Amazon. In addition to the luxury jewelry industry, jewelry industry halo, the most important reason is its asset yield. We see returns on equity (return on equity, equal to "net profit/average shareholder equity") and total asset yield (return on assets, equal to "net profit/Average total assets"), bluenile up to 45.3% and 17.31% respectively, Twice times more than two other companies (even Apple can only do 34% and 21.5%).

So, BlueNile seems mediocre, seemingly did not grow, but the efficiency is very high. Shareholders invest a small share of the assets, but the output is staggering. This is also the luxury industry, bluenile the main reason for high PE. (From this dimension, the diamond birds, led by a group of diamonds, are very rich.) ）

Some people will ask, the return on net assets and total asset yield in the end, which index can better measure the ability of enterprises to make money? Although BlueNile than Amazon and retailer is a victory, but compared with Apple, the two indicators have a win-win, in the end who is more profitable?

To understand this, you first need to understand the difference between the two formulas. In fact, the molecules are the same-net profit, the denominator of the return on equity is the shareholder equity, the total asset yield is the denominator of total assets, the difference is a debt, shareholder equity + debt = Total assets. Therefore, in extreme cases, if a company does not have any debt (long-term, short-term, etc.), two indicators are equal. But in fact, even if a company does not borrow heavily, there will be a lot of accounts payable, so the two will not be equal. When you understand the difference in the denominator, the answer is apparent.

From the point of view of the use of funds, whether the money is a shareholder, or borrowed, are money, all to see if there is no use in the blade! So total asset yield is the best observation of the ability to make money, regardless of who the money is! From this point of view, Apple compared to 21.5% bl 17.31%, above.

The net asset yield is bluenile higher, and we can speculate that the ratio of bluenile debt to total assets must be higher than that of Apple (in real 09 The two companies were 67% and 31% per cent respectively). But the bluenile is wonderful, the 67% of the debt, the majority of which are due to pay, and have a period (estimated at two months or so). That is to say, the bluenile with 31% of the total assets of the shareholders into the operating company, in the daily sales operation, free access to the use of two months of a large amount of cash (accounting for more than 60% of the assets, financial accounting for debt), this is the "small" white Wolf model, a great "give me a fulcrum I can pry the earth" of unrestrained , this indicator is actually in the statement of shareholder investment capital "to small beat big" profit ability, for shareholders more important. (Note: As long as it is not because of a large amount of debt or repurchase stock and other abnormal behavior caused by the high net assets yield, is relatively healthy, good news to shareholders)

For example, the total asset yield is like Shaolin Kung Fu, the big deal, there is no trickery; return on net assets good tournament when Tai Chi pushing hands, through force, even if the shareholders own capital is small, can still support a large business, and achieved a good return on equity. This is not only the characteristics of the bluenile, but also the magic of the business industry.

Let's see how this magic happens.

For example, Beijing East, this year to do 10 billion of the business, you think it needs how much money?

Here, inventory turnover is the most important factor. Jingdong so-called inventory turnover in 12, 13 days of appearance, that is, one months inventory can be turned almost 3 times (Liu also really said to do 10, 11 days, Amazon09 earnings is 12 days). What is the concept of a one-month turn 3 times? In other words, jingdong only needs to maintain monthly sales (cost) of 1/3 of the inventory, sufficient to support the month's revenue. 10 billion a year, monthly sales of 830 million, inventory only need to sell 1/3, that is, about 280 million of the conventional inventory, is enough to support a year of 10 billion business. (Note: The inventory should be deducted from the gross margin sales of sales costs, and then take 1/3, but due to the Lower East margin is omitted, other industries can not be arbitrarily province. ）

Does it sound magical?

If there is no feeling, please allow me to compare Su ning. Suning 09 Earnings Inventory turnaround days are 42 days, 8.7 times a year. That is to say, if Suning also do 10 billion business, need about 1.15 billion of the inventory, compared to Jingdong under Jingdong only need less than 300 million of the investment, can do the same scale business. In addition, in the shop, offline retail also need to invest a large amount of resources and cash flow, the consumer because the warehouse is not much, since the point of small size, in this item also has advantages. This is an important factor in the prospect that the return on net assets is expected to be higher than the traditional peers (but if the net interest rate is too large, it is likely to be lower than the peers).

In fact, Suning in the retail has been counted to do very good, retailer inventory turnover is also more than 40 days of level, retailer with such turnover standard beat the turnaround days up to 60-70 days of incrementally city (the United States had 3C retail giants, 08 has gone bankrupt).

Brand Business-to-consumer is similar. The recent interview also claimed that Vancl's inventory turnover was in the 40 days, while Mattel's 09 earnings showed it as high as 97 days. At the same time vancl because of self-employment, has not yet joined, so its receivables are very few, at most it is Alipay such some payment company; but the United States due to both proprietary stores also have franchises, the size of the accounts receivable (and 09 accounting period of 30 days), clothing industry, like Li Ning even as high as 50 days (more special distributor strategy), These will affect the efficiency of the use of funds. (Note: But offline mode will have a higher gross margin and net interest rate to offset the adverse effects of high inventory turnover on enterprises, companies have different strategies)

But why is it that the company can get a higher inventory turnover than the traditional enterprise?

First, the consumer's mastery of user needs is more accurate, systematic and real-time, and is inherently more advantageous than traditional retailing in sales forecasts.

Second, because of the shorter supply chain, the warehouse is less than the traditional retail, in particular, there is no large number of stores need to shop (at most the experience shop or from the point will have a part of the inventory), centralized inventory is more conducive to the reduction of inventory turnover days.

Third, the traditional enterprises can only do good selling goods management, but relatively unpopular products will be more difficult to manage, and the customer because of "shelf" unlimited, and can monitor the long tail product browsing situation, you can more flexible adjustment of inventory.

...... A lot of reasons, do not repeat, anyway this is given to the god of the gift, not good to use is waste. If you don't know how to use it, it's a good idea to look at the "March limit-the power of the supply chain" Veryls recently recommended.

In fact, in addition to the advantages of the stock turnover, the Business-to-consumer also extended some advantages.

For example, for the 3C industry, because turnover is fast, the price loss is also less than the traditional industry, for the department store industry, due to turnover fast, outdated, waste loss is less than the traditional industry, for the jewellery and diamond industry, due to turnover fast, melt remelting loss than the traditional industry less ...

In addition, Chinese consumers have also created some unique ways to improve the efficiency of their funds.

Since payments and logistics have long hindered the development of the company, the company has launched its own logistics in densely populated cities, offering delivery (from early cash to the current POS card) business. If you outsource this service, on the one hand, not as good as their own team (current situation, Jingdong 211 if outsourced to the third party logistics is difficult to do, the goods should lie more than two days to reach customers; On the other hand, the third party logistics return period is long, three days, seven days, two weeks are very exaggerated figures, Beijing east to do their own cash rebate in fact, as long as half a day, the distribution of a half-day payment.

Some would say that 3PL could use a POS machine to solve the problem, and it is true that the industry is more adaptable to high margins. However, because the rate of POS machines in the 3C industry than the logistics industry can apply to lower rates, so it does not apply to Jingdong (do not know the outstanding, when the POS rate applied to the number, but I think it will be lower than the logistics industry). The gap here is up to 0.3% to 0.5% of the sales rate, for large integrated business-to-consumer with low net interest rates, which can account for more than 10% per cent of net profit (with a reference to the retailer rate of more than 2), unless the size of the 3PL is large enough to save this part of the cost, Therefore, since the construction of logistics is also the status quo must be.

Section 3 Summary:

Benefiting from rapid inventory turnover and fast cash flow, the company has a gift than the traditional industry, can use very small funds to pry a large amount of sales, Jingdong use less than 300 million funds to pry 10 billion business exaggerated case to help us understand (btw, this 300 million is not Jingdong's own money, is to the supplier of accounts payable, Is the "borrowed" money from Jingdong. As a result, the consumer has an advantage in the efficiency of capital use, and ultimately it is expected to bring more returns to shareholders in return on equity.

But, in addition to turnover, the net asset yield is also affected by netting rates, so the direction of the consumer effort can actually be understood: if the turnover advantage is 4 times times that of the traditional retail peers, then the value of the consumer will be higher if the net interest rate reaches more than 1/4 of the traditional retail peers.

Given that suning retailer only about 2% per cent of the net interest rate, the value of Jingdong is more than their problem, and vancl to work harder, because the U.S. state's net interest rate as high as 11% (35 times times P/E), VANCL can make a 5% net interest rate?

Related reading:

The effect of 3--net interest rate on the value of the Business-to-consumer from the stock market

The influence of the value 2--sales on the stock market